Central Bank holds second forward forex auction, sells $40m to BDCs
The Central Bank of Ghana has held its second forward foreign exchange auction of 2023, making $40 million available to Bulk Oil Distribution Companies (BDCs) at a rate of 10.98 pesewas per dollar.
The auction, which took place on January 30th, saw 30 BDCs submit bids ranging from 10.35 to 11.02.
The second of several auctions scheduled for Q1 2023, the Central Bank projects a total of $200 million to be sold to BDCs during this period.
The rate of the auction is lower compared to the $420 million auctioned in Q4 of 2022, reflecting a decrease of $220 million in the Central Bank’s forex forward auction to BDCs.
Forward Forex Auctions for Stability and transparency
The purpose of the forward foreign exchange auction is to minimize uncertainty and promote price discovery in the downstream sector.
By offering a fixed amount of foreign exchange at a fixed rate, the Central Bank aims to stabilize the market and ensure consistency in the pricing of downstream products.
The new forward auction format marks a departure from the Central Bank’s previous approach of selling foreign exchange at a single rate determined by supply and demand.
This new format is expected to bring increased transparency and improved efficiency to the foreign exchange market.
Further Auctions Scheduled
The Central Bank has announced a third auction worth $30 million to be held on February 14th, with subsequent auctions planned for February 24th, March 14th, and March 29th, each worth $30 million.
This shift in the Central Bank’s foreign exchange policy aligns with its commitment to creating a more stable and predictable business environment in Ghana.
It is also expected to have a positive impact on the country’s balance of payments and overall economic performance.
